The Cost of Living Index measures relative price levels for consumer goods and services in participating areas. The average for all participating places, both metropolitan and nonmetropolitan, equals 100, and each participant's index is read as a percentage of the average for all places.

The Index does not measure inflation (price change over time). Because each quarterly report is a separate comparison of prices at a single point in time, and because both the number and the mix of participants may change from one quarter to the next, index data from different quarters cannot be compared. For inflation data contact the nearest regional office of the U.S. Bureau of Labor Statistics.

Because the number of items priced is limited, it is not valid to treat percentage differences between areas as exact measures. Since judgement sampling is used in this survey, no confidence interval can be determined. Small differences should not be construed as significant, or even as indicating correctly which area is the more expensive place to live.

How to Use the Cost of Living Index
Assume that City A has a composite index of 98.3 and City B has a composite index of 128.5. If you live in City A and are contemplating a job offer in City B, how much of an increase in your after-tax income is needed to maintain your present lifestyle?

100*[(City B - City A)/City A] = 100*(.3072) = 30.72% Increase

Conversely, if your are considering a move from City B to City A, how much of a cut in after-tax income can you sustain without reducing your midmanagement lifestyle?

100*[(City A - City B)/City B] = 100*(-.2350) = 23.5% Decrease

The Cost of Living Index Manual
For more information about how the Cost of Living Index is prepared or to learn what you need to do to participate, download the Cost of Living Index Manual.